Wendy's 2010 Annual Report Download - page 10

The Wendy’s Restaurant System
Wendy’s is the third largest restaurant franchising system in the United States specializing in the hamburger
sandwich segment of the quick service restaurant industry. According to Nation’s Restaurant News, Wendy’s is the
fourth largest quick service restaurant chain in the United States.
Wendy’s is primarily engaged in the business of operating, developing and franchising a system of distinctive
quick-service restaurants serving high quality food. At January 2, 2011, there were 6,576 Wendy’s restaurants in
operation in North America and in 22 foreign countries (other than Canada) and United States territories. Of these
restaurants, 1,394 were operated by Wendy’s and 5,182 by a total of 490 franchisees. See “Item 2. Properties” for a
listing of the number of company-owned and franchised locations in the United States and in foreign countries and
United States territories.
The revenues from our restaurant business are derived from three principal sources: (1) sales at company-owned
restaurants; (2) sales of bakery items and kids’ meal promotional items to franchisees and others; and (3) franchise
royalties received from all Wendy’s franchised restaurants.
Wendy’s is also a 50% partner in a Canadian restaurant real estate joint venture with Tim Hortons Inc. The
joint venture owns Wendy’s/Tim Hortons combo units in Canada. As of January 2, 2011, there were 105 Wendy’s
restaurants in operation that were owned by the joint venture. The Tim Hortons menu includes premium coffee,
flavored cappuccinos, specialty teas, home-style soups, fresh sandwiches and fresh baked goods.
Wendy’s Restaurants
Wendy’s opened its first restaurant in Columbus, Ohio in 1969. During 2010, Wendy’s opened 9 new
company-owned restaurants and closed 4 generally underperforming company-owned restaurants. In addition,
Wendy’s sold 2 company-owned restaurants to its franchisees. During 2010, Wendy’s franchisees opened 69 new
restaurants and closed 39 generally underperforming restaurants. In 2009, 71 franchised restaurants were closed in
Japan at year-end upon the expiration of the related franchise agreement.
The following table sets forth the number of Wendy’s restaurants at the beginning and end of each year from
2008 to 2010:
2010 2009 2008
Restaurants open at beginning of period ..................... 6,541 6,630 6,645
Restaurants opened during period .......................... 78 63 97
Restaurants closed during period ........................... (43) (152) (112)
Restaurants open at end of period .......................... 6,576 6,541 6,630
During the period from December 31, 2007, through January 2, 2011, 238 Wendy’s restaurants were opened
and 307 generally underperforming Wendy’s restaurants were closed.
Operations
Each Wendy’s restaurant offers a relatively standard menu featuring hamburgers and filet of chicken breast
sandwiches, which are prepared to order with the customer’s choice of condiments. Wendy’s menu also includes
chicken nuggets, chili, baked and French fried potatoes, freshly prepared salads, soft drinks, milk, Frosty™ desserts,
floats and kids’ meals. In addition, the restaurants sell a variety of promotional products on a limited basis. Wendy’s
has tested breakfast in certain markets and plans to expand its breakfast initiative in 2011.
Free-standing Wendy’s restaurants generally include a pick-up window in addition to a dining room. The
percentage of sales at company-owned Wendy’s restaurants through the pick-up window was 64.9%, 64.6%, and
63.8% in 2010, 2009, and 2008 respectively.
Wendy’s strives to maintain quality and uniformity throughout all restaurants by publishing detailed
specifications for food products, preparation and service, continual in-service training of employees, restaurant
operational audits and field visits from Wendy’s supervisors. In the case of franchisees, field visits are made by
Wendy’s personnel who review operations, including quality, service and cleanliness and make recommendations to
assist in compliance with Wendy’s specifications.
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